Bitcoin-Related Businesses Subpoenaed By U.S. Attorney

First The Wall Street Journal reported that federal prosecutors had subpoenaed Japanese bitcoin exchange Mt. Gox. Now Reuters is reporting that the Manhattan U.S. Attorney’s Office has subpoenaed multiple bitcoin-related businesses. So is this a death blow for the digital currency, or will investors not be concerned about it?

So far, they don’t seem too worried, as other exchanges, like U.S.-based CoinBase, continue to show bitcoin prices in the $500 to $600 range. In fact, prices have actually increased at CoinBase since the issues at Mt. Gox started, suggesting that enthusiasts of the crypto-currency will simply turn their backs on Mt. Gox and not bitcoin itself.

Bitcoin-related businesses questioned about cyber-attacks

According to Reuters’ sources, the subpoenas seek information about how the bitcoin exchanges and other businesses which deal in bitcoin have handled cyber-attacks. Those attacks are known as DDoS or denial of service attacks, and they involve overwhelming bitcoin exchanges by pushing through thousands of fake transactions.

On Feb. 7, Mt. Gox and two other smaller bitcoin exchanges halted withdrawals of the digital currency because of DDoS attacks. Mt. Gox still hasn’t resumed service, and some are speculating that the company is bankrupt or possibly even an acquisition target.

Another unnamed source cited by Reuters told the news outlet that federal law enforcement in the U.S. has launched an investigation into Mt. Gox. A third source said the FBI was monitoring the situation involving the troubled bitcoin exchange. A spokesman with the Japanese government also said the nation’s Finance Ministry was looking into the exchange’s abrupt closure.

Bitcoin gets more attention than ever

Regulators started showing interest in bitcoin some months ago, and some have been warning consumers about the risks associated with investing in the digital currency. However, Brett Stapper of Falcon Global Capital says issues like the subpoenas sent to bitcoin-related businesses are merely growing pains. The firm is beginning a bitcoin investment fund in a few days, and he says they haven’t received a subpoena yet, but they are ready if they do receive one.

“Our lawyers contacted me this morning and explained the high likelihood that we will be subpoenaed along with other Bitcoin related businesses,” Stapper told ValueWalk. “We are yet to receive one however, would gladly invite the opportunity to discuss in depth our operations and our knowledge of Bitcoin with any government who wishes to understand it more. I feel this should be seen as a positive, rather than a negative as it allows the government direct access to leaders in the industry which can help ensure Bitcoin is properly explained and understood.”

Is bitcoin finished?

Reuters also reports that there’s an upgrade for bitcoin planned which will make it harder for hackers to change the transactions listed in the digital currency. Every time a transaction is made using a bitcoin, it is recorded in the code. Hackers have been slightly modifying bitcoin codes in order to make thousands of copies of transactions, which slowed down bitcoin exchanges as they had to verify every single transaction.

Investors will undoubtedly be watching this upgrade to see how it affects exchanges.

Author: Michelle JonesMichelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at Mjones@valuewalk.com.